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SHORT CHINA [SARS]
Newsmax.com ^ | April 30, 2003 | Dr. Jack Wheeler

Posted on 05/01/2003 2:32:31 PM PDT by FreepForever

The World Health Organization (WHO) announced on Monday that “the worst is over” regarding the SARS epidemic in Vietnam, Hong Kong, Singapore and Canada. WHO pronounced Vietnam as being the first country to eradicate the disease, and praised it for doing so transparently, quickly and efficiently.

One reason Vietnam was able to do so is because it closed its border with China. For notably absent in the WHO announcement was any praise for China. The worst is not over for China. The worst – far worse – is yet to come.

Ninety percent of SARS cases worldwide to this day are in China. This percentage will climb. By covering up the epidemic when it first emerged in Guangdong province last November, rather than institute the sort of health security actions performed by Vietnam, the PRC government has let the SARS toothpaste out of the tube.

Much has been made of the mandarins of Beijing shutting down theaters et al., taking all sorts of measures to bolt the Beijing barn door shut. Too late – SARS is streaking across the Chinese countryside now, on the loose and uncontrollable.

Further, the cover-up continues. The 4/28/03 Time Magazine Asia Edition disclosed that the city government of Shanghai is suppressing info on SARS, treating SARS cases as “a state secret” to prevent panic not only among its 17 million citizens but also among international businessmen doing business there.

Thus, while the rest of the world – provided it remains alert and doesn’t let its guard down – may have dodged the SARS bullet, China may be gut shot. The economic consequences for both China and America may be enormous.

For the first time in years, China admitted that it ran an overall trade deficit for the first quarter of 2003, in the amount of $1.03 billion. China has been claiming huge trade surpluses year after year, but as with most stats coming out of Beijing, these are phony – as imports from Hong Kong are not counted.

The putative reason given for the deficit was higher oil prices, but the real reason is people doing less business and buying fewer Chinese goods due to SARS.

From Wal-Mart on down, company after major company is banning all travel to China. Nike, which produces almost 40 percent of its shoes in China, is planning to move its production out of the country. The Canton Trade Fair, the single largest in China, is canceled.

The reverse quarantining of China by international businessmen is bad enough, but as SARS really explodes throughout the countryside and within major cities like Shanghai, Americans and others will become afraid of buying Chinese-made goods.

It is already starting to happen with Nike shoes labeled “Made in China.” There is little rational chance of such shoes or other items such as shirts and clothing being infected, but once fear sets in, that rational chance doesn’t matter. China’s exports are set to fall off a cliff. The World Bank reported 8.0 economic growth for China in 2002, and projected 7.2 for both 2003 and 2004. You can kiss that latter number goodbye.

These growth numbers are just as phony as the trade numbers, in any regard. They are pumped up by state spending and subsidies for state-owned enterprises (SOEs) making stuff nobody buys. The “state secret” the Chinese government is more afraid of being exposed than SARS in Shanghai is that its banking system is bankrupt. That system goes over the SARS cliff with the exports.

As the fragile China economy implodes, the Beijing mandarins will be forced to start spending their stash of over $240 billion in foreign reserves. The Chinese currency – called renminbi domestically, yuan internationally – is de facto pegged to the dollar. As they spend those reserves to import goods and prop up the banks and currency, the dollar’s value against the euro (already improving since the end of the Iraq war) will accelerate.

The stock of any U.S. companies that are exporters, or whose U.S.-made products have been suffering from Chinese competition, should be good buys. Short those folks who are in China deep, who are dependent on selling stuff labeled “Made in China.”

Following Nike, companies are going to flood out of China to set up shop elsewhere in Southeast Asia, particularly Vietnam, Thailand and Malaysia. The stock exchanges of these countries will be buys. Possibly India as well, but only if Indian bureaucrats can miraculously evolve from ponderously slow-moving elephants to critters that can move quickly to drain regulatory swamps and barriers to competition. History moves in funny ways. China has sought to insulate itself from being infected with the economic maladies of its neighbors, from Thai banking crises to Japanese stagnation. Now an infection from within – a homegrown disease coming from nowhere out of the filthy mixture of ducks and pigs and people living tightly together in vast numbers – may prove lethal to its economy, its social structure and its communist government.

No matter how bad SARS gets, China will recover. Business and businessmen will return. But that is later. Right now there is a disaster, and it’s going to get a lot, lot worse before it gets better. There is no virtue or altruistic nobility in ignoring the opportunity this represents to make money by shorting China.


TOPICS: Editorial; Extended News; Foreign Affairs; Front Page News
KEYWORDS: china; chinastuff; economy; sars; vietnam; who
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Jack Wheeler is president of the Freedom Research Foundation and editor of To The Point™, a geopolitical intelligence service at www.tothepointnews.com.
1 posted on 05/01/2003 2:32:31 PM PDT by FreepForever
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To: *China stuff; HighRoadToChina; tallhappy; Brian Allen
Ping
2 posted on 05/01/2003 2:41:56 PM PDT by FreepForever (China is the hub of all evil)
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To: FreepForever; CathyRyan; Mother Abigail; Dog Gone; Petronski; per loin; riri; flutters; ...
Wheeler seems unaware of the possibility that the population of China may be more vulnerable genetically to SARS than the population of most other countries.
3 posted on 05/01/2003 2:42:04 PM PDT by aristeides
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To: aristeides; CathyRyan; OKCSubmariner; riri; Dog Gone; Judith Anne
And perhaps Arabs are less genetically vulnerable by nature or design.

Where is Don Wiley when you need him?

Where are the forensic financial number crunchers with their findings on who did what prior to November SARS cases.
4 posted on 05/01/2003 2:50:15 PM PDT by Betty Jo
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To: FreepForever
If WHO says it, it must be true. The UN would never lie.
5 posted on 05/01/2003 2:51:47 PM PDT by Russell Scott (Don't blame me for being Islamophobic, I was born that way.)
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To: aristeides
So what? It was still containable early, but they mismanaged the effort and now they will pay, unfortunately for them.
6 posted on 05/01/2003 2:56:00 PM PDT by last_one_standing
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To: theFIRMbss
FYI
7 posted on 05/01/2003 3:37:59 PM PDT by FreepForever (China is the hub of all evil)
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To: last_one_standing
I couldn't agree more. Do you think they should lose the right to host the Olympics due to the lies they have told the world during this crisis? It is just a thought.
8 posted on 05/01/2003 3:46:18 PM PDT by Cdnexpat
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To: Cdnexpat
I just had a warped thought: if China does the Yugoslavia thang shortly before 2008...

Could you imagine just how f*cked the IOC would be? You CAN'T move a party that big on really short notice.

Imagine if they'd slated Sarajevo for the 1992 Winter Olympics instead of 1984. Mortar shells landing on the downhill ski venue...
9 posted on 05/01/2003 3:52:16 PM PDT by Poohbah (Crush your enemies, see them driven before you, and hear the lamentations of their women!)
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To: FreepForever
Thank you BUMP!
10 posted on 05/01/2003 4:07:43 PM PDT by HighRoadToChina (Never Again!)
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To: All
How cool would it be if the biggest thing SARS kills is the communist government of China?

Eventually, the slaves will wake up...

11 posted on 05/01/2003 4:15:26 PM PDT by Ferris (Man must come to grips with the power of his own consciousness)
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To: last_one_standing
"and now they will pay"

Last I heard the Chinese were split between blaming al quaeda and the US...let's hope they shift the blame to al quaeda or we might pay dearly. Think of how devastating this SARS is along with the possibility that the Chinese might be the most vulnerable on the planet. Even if it is shown beyond a doubt that it is a natural disaster, the level of damage will demand a scapegoat.
12 posted on 05/01/2003 4:50:41 PM PDT by Domestic Church (AMDG...)
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To: FreepForever
This has go to be the most grim report I have ever seen, about anything.

What makes anyone think that the world can contain SARS to just China?

13 posted on 05/01/2003 5:07:44 PM PDT by blam
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To: Ferris
"How cool would it be if the biggest thing SARS kills is the communist government of China? "

I've read that some of the leadership have already gotten SARS.

14 posted on 05/01/2003 5:09:43 PM PDT by blam
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To: blam
What makes anyone think that the world can contain SARS to just China?

Sorry, I don't quite get what you mean. Could you elaborate?

The author had only expressed his view on the economic impact of SARS on China.

15 posted on 05/01/2003 6:20:58 PM PDT by FreepForever (China is the hub of all evil)
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To: Ferris
How cool would it be if the biggest thing SARS kills is the communist government of China?

Well said. Their initial cover-up of the epidemic is a solid proof that the government had put their maintenance of power over the lifes fo the people.

16 posted on 05/01/2003 6:25:47 PM PDT by FreepForever (China is the hub of all evil)
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To: Domestic Church
Last I heard the Chinese were split between blaming al quaeda and the US...let's hope they shift the blame to al quaeda or we might pay dearly.

I doubt they have the nerve to point an accusing finger to anybody. Moreover, aren't the Al Quaeda China's buddy?

This epidemic is more likely caused by an accidental leak in one of their own biological weapon research lab.

17 posted on 05/01/2003 6:31:03 PM PDT by FreepForever (China is the hub of all evil)
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To: FreepForever
"The author had only expressed his view on the economic impact of SARS on China."

Are we to expect that the economies of other countries will not be equally devestated once SARS spreads out of China?

18 posted on 05/01/2003 6:37:26 PM PDT by blam
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To: Jorge
Ping
19 posted on 05/01/2003 7:40:51 PM PDT by CJ Wolf (catch up...)
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To: blam
You tell em,blam!
20 posted on 05/01/2003 7:45:25 PM PDT by Betty Jo
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